Biling, Blackouts, and the Obligation to Serve

Deck: 
Complex billing is one way to minimize the size and frequency of blackouts.
Fortnightly Magazine - June 2004
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Complex billing is one way to minimize the size and frequency of blackouts.

The search continues for the smoking gun responsible for the Northeast blackout last August. Absent a clearly defined single cause, analysts turn to the usual suspects: Is the grid large enough? Does it require additional investment? Given that the grid was never designed to handle a competitive industry, is it reasonable to require that it now do so?

At the core of these issues is the obligation to serve. The grid is sized correctly when the industry can meet that obligation at the lowest reasonable cost.

Defining that obligation, then, is key to blackout prevention. But the electric industry and its policy-makers-and the nation as a whole-have yet to reach consensus. Some seek to maintain the . Others believe the obligation should be expanded to include emerging customer needs and niches. Some define the obligation as local. Others have a regional or national view.

A consensus definition of the obligation to serve may be long in coming. In the meantime, the public rightly demands that we focus on near-term blackout prevention. Doing so means acting in the face of uncertainty. But failure to act is not an option.

The Value of Demand Response

Given these circumstances, it makes sense to concentrate first on maximizing the efficiency of the existing grid. Demand response programs clearly fall into that category. While they require complex billing software, that investment is far smaller than such grid-expansion remedies as more towers, more line, and more rights of way.

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